High staff turnover and high salary inflation are characteristics of the Indonesian job market for the year ahead due to a shortage of candidates with right skills and qualifications, reports Michael Page’s 2016 South East Asia Salary & Employment outlook.

As the country undergoes a period of change with demands from the fast-growing middle classes, businesses are presented with huge growth opportunities.

At one end of the spectrum is the region’s most developed economy, Singapore, where growth is modest, albeit steady, and salary inflation and staff turnover are relatively low compared to other ASEAN countries.

At the other end are markets like Indonesia, where a young population and a burgeoning middle class mean that some industries are growing at breakneck pace. That brings with it sometimes large increases in salary and high turnover of staff as companies compete for talent.

Anthony Thompson, Regional Managing Director, Greater China & South East Asia, PageGroup, said, “Despite pressures such as political uncertainty and the persistent low oil prices, South East Asia as a region continues on its path of strong growth, with recruitment ongoing across almost all sectors.”

See: Indonesia releases economic package, new wage system

“Professional services such as human resources are increasingly being seen as a critical part of the business to deal with high staff turnover. The current market demands candidates with digital skills and regional experience as an increasing number of businesses expand their business across borders,” Thompson added.

Indonesia sees growth in the engineering and manufacturing sectors due to the relatively low labour costs and increasing demand for infrastructure. This results in a need for talent with strong technical skills, while possessing excellent communication skills and having the experience of working in multinational companies are also highly valued.

Olly Riches, President Director, Indonesia, Michael Page said, “Indonesian companies are under pressure to localise their workforce as much as possible, and this adds to the strain on the talent pool. 12 months ago, the priority for companies was recruitment, and that has now shifted to retention and counter offers to stem talent loss. 20% of employers say that they are struggling to find suitably qualified human resources professionals.”

“This reflects that human resources have traditionally been viewed as an administrative function but has since moved as companies are now realising that non-financial benefits can improve staff retention, cut costs and retain skills.”

2015 is the year where the region’s economies are due to be integrated into the ASEAN Economic Community (AEC), encouraging free flow of trade, investment and people among the 10 member states.

With this comes access to a wider pool of talent, but response thus far has been lukewarm, with approximately a third (36%) of the respondents saying they have yet to decide or were not interested in hiring from other countries.

The Michael Page South East Asia 2016 Salary & Employment Outlook is a report based on survey findings of more than 850 employers across a range of industry sectors in Singapore, Malaysia and Indonesia.

Insights drawn from a series of roundtable discussions with employers further enriched the report. The report aims to provide an overview on market and employment conditions, wages, and an outlook across the different sectors.

Also read: Foreign Workers in Indonesia obliged to join the Social Security System

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